Kyrgyzstan: Brewing Financial Scandal Stoking Media Controversy

An arrest warrant issued for a financial manager in Kyrgyzstan with ties to the Kyrgyz government is stirring a media controversy in Bishkek.

The trouble erupted March 9, after news became public that an Italian judge had authorized an arrest warrant for Eugene Gourevitch, an American citizen based in Kyrgyzstan, who is accused of being part of a conspiracy to defraud the Italian telecom of about $2.7 billion. Shortly after posting reports on the Gourevitch warrant, several websites -- including Ferghana.ru and Azattyk.kg -- began experiencing access problems. A subsequent Ferghana.ru report alleged that Kyrgyzstan's leading Internet Service Providers were deliberately blocking access to the independent news websites.

On March 11, access to at least one of the affected sites, Azattyk.kg, had been restored. But the others remained inaccessible to readers in Kyrgyzstan.

Gourevitch was a managing director of MGN, an asset management company that played a consultative role in the handling of investments for Kyrgyzstan's Development Fund. The $300-million Development Fund is managed by the recently created Central Agency for Development, Investments and Innovations, which is headed by President Kurmanbek Bakiyev's son, Maxim Bakiyev. The bulk of the Fund's assets came from a massive loan granted by Russia to Kyrgyzstan last year. [For background see the Eurasia Insight archive].

In early March, Gourevitch resigned from MGN, as well as from positions with several entities in Kyrgyzstan, including board memberships at Asia Universal Bank, Manas International Airport, and the state-owned monopoly, Electricheskie Stancii. MGN's contract with the Development Fund has also been terminated, the fund's chairman, former prime minister Igor Chudinov, said in statement on March 10.

In a statement published in the Kyrgyz press on March 10, Gourevitch said he "categorically rejects" the charges against him.

"I draw attention to the important fact that the accusations made against me ? are not in any way connected with any of my activities in Kyrgyzstan, nor with MGN Group, and refer to the time when the company MGN Group did not yet exist," the statement said.

"I value my reputation and the reputation of all my colleagues, staff and friends," the statement continued. "In terms of the charges, maintaining a successful business is extremely difficult since the protection of reputation requires a lot of time and effort. Therefore, in this situation I felt it necessary to resign from all leadership positions."

Despite the lack of a connection between the warrant and Gourevitch's activities in Kyrgyzstan, some observers in Bishkek say the embattled financier could pose a PR problem for Bakiyev's administration.

"Even though Gourevitch has resigned, this financial [charge] in Italy about fraud will influence the family's image and Maxim Bakiyev's image," political analyst Mars Sariev told EurasiaNet on March 10. ."It will also influence the image of Asia Universal Bank and the Development Fund. The opposition might use this situation. Also, Russia will have a reason to pressure [the Bakiyev administration] because all of their $300 million went through the Development Fund. Maybe the Development Fund will have to do a transparent audit to show where the money went," Sariev added.